Exam 4: Enforceability of Contractual Rights

C,a neighbour of D,wished to borrow a sum of money from a local bank.D was quite wealthy but elderly,with very poor eye sight.He frequently requested C to read his newspaper to him when C would drop by for a visit because reading was exceedingly difficult for him. One evening,C placed a paper before D and explained to him that he wished to borrow a sum of money but required a letter of reference before the bank would make the loan.He requested D to sign to the paper to satisfy this requirement.D trusted his friend C,and signed the paper at his request without reading it. Unknown to D,the paper was a guarantee of C's indebtedness,and not a letter of reference,and C later defaulted on his debt.

Susan,who is functionally illiterate,asks her friend Jane to read a document aloud to her.She is to sign it in order to purchase chinchillas from Patricia to start a breeding farm.Actually it is a deed transferring ownership of Susan's farm to Patricia and,unknown to Susan,Patricia and Jane have made a secret agreement to sell the farm and share the proceeds. -Susan could not raise the defence of non est factum if the document she signed was one to purchase chinchillas but for a much higher price than Jane read to her.

Sarah is suing her lawyer,Tom Takeitall,for the return of property worth $20,000 that she had given him.She had signed a properly sealed document making the gift to him.She says she knew what she was signing but felt overwhelmed by his manner. -If Sarah,through embarrassment,fails to do anything about the return of the property for several months,it is unlikely that she would then win an undue influence suit even if she might have done so if she had acted promptly.

In the presence of several witnesses,Quentin verbally agreed to purchase Trevor's farm for $175,000.The next day,Trevor changed his mind,and refused to sell the farm to Quentin.On the strength of the verbal agreement of purchase and sale made in the presence of witnesses,Quentin sued Trevor for breach of contract,and for a decree of specific performance to compel Trevor to sell him the farm. -Assuming the verbal agreement is unenforceable,the contract would still exist.

Sara purchased an old glass vase that Rina represented as an antique made by a famous Italian glassmaker in the 17th century.As proof of its authenticity,Rina produced an old paper with a rough sketch of the vase on it,along with some writing,and what appeared to be the glassmaker's name.Sara later sold the vase to Lise,after telling Lise the story of the vase as told to her by Rina.After Lise purchased the vase,she discovered it to be a reproduction of the original,and of very little value. -Lise should act promptly to void the contract on discovery of the misrepresentation,as Lise will lose the right to do so if much time is allowed to pass.

Generally,a party is under a duty to disclose material facts to the other contracting party,and failure to do so is a violation of his or her duty of utmost good faith.

Simon bought a used yacht from Marvel's Marina and Boatyard for $70,000 to be paid in instalments over six years.He traded in his smaller yacht for $10,000 at the same time,but Marvel wanted to keep the two transactions separate for financial reasons and he promised to issue a cheque to Simon for the trade-in.Marvel assigned the $70,000 contract to Strait and Naro Finance (S&N).The first Simon knew of this was when he received copies of both contracts and a notice to pay the payments to S&N. -Based on the above scenario,which is the most correct?

Ravi,an art collector,had been made a standing offer by a gallery to purchase one of his paintings for $150,000.At shows and luncheons of the art community he had previously rejected the entreaties,knowing the painting to be worth at least twice as much.On the latest occasion of a luncheon at which Ravi was deliver an art commentary to the guests,the gallery made its offer once more.To himself,Ravi considered the offer and concluded he could use the charitable tax relief that such a sale at a loss would generate.In the course of his speech,he acknowledged and accepted the offer.Two days later,Ravi's lawyer advised him that the purchasing gallery was NOT a charitable foundation,and no tax deduction for such a "donation" could be expected.Ravi then refused to sell the painting to the gallery.On the strength of the verbal agreement of purchase and sale made in the presence of witnesses,the gallery sued Ravi for breach of contract,and for a decree of specific performance to compel Ravi to sell it the painting. -Ravi may successfully plead the Statute of Frauds as a defence.

Mathieson wanted to lease a suite in the new office building owned by Logan,which is the most prestigious in town.He knew that Logan would not rent to him because of a business deal several years ago that had gone bad,costing Logan a great deal of money.Logan swore he would never do business with Mathieson again.Mathieson paid Muir to act as an agent for his company,and Logan rented to him.Several months later,Logan found out who had really rented the suite.

Misrepresentation by non-disclosure renders a contract voidable at the option of the party misled.

Able contracts to build a computerized printing press for Baker.Able subcontracts some of the work on the computerized components to another company,Charlie Co. ,which wired a vital component negligently.The repairs are very costly for Baker.He can sue Able for the losses caused by Charlie Co.

Kathy sells her business to Lucy for $40,000 including the stock,the goodwill,and the remainder of the lease.The landlord agrees that Kathy may end her involvement with the leased premises and that Lucy may take over the remainder of the lease on the same terms,and a new lease reflecting this is drawn up and signed by the landlord and Lucy.This new lease is an example of

John was indebted to Stan on a loan for $1,000.Stan assigned John's promise to pay to Bob. -The assignment by Stan to Bobmust be in writing to be an effective assignment.

If Alan is a beneficiary of his father's life insurance with Avuncular Life,he has the statutory right to enforce payment if his father dies and Avuncular refuses to pay on the grounds that Alan lacks privity of contract with it.

Box Co.assigns a conditional contract with Yee to Zip Finance on November 10.Zip Finance notifies Yee of the assignment on November 17.Yee had mailed his cheque to Box Co.on November 12,although it wasn't due until November 15. -Yee must put a stop payment on the cheque to Box Co.and issue a new one to Zip Finance for the November 15 payment.

Kevin was injured when a bottle of pop,purchased by Katie and given to him,exploded in his hand.Kevin cannot sue the manufacturer in contract and receive damages for his injuries because he lacks privity of contract.

Mr.Richards instructed the contractor building his new house to face it with a special synthetic marble made by Messalot Ltd.Messalot had promised Mr.Richards in writing that the synthetic marble would last longer than the Parthenon and be in better shape.Within three months of its installation,which was properly done,the "marble" was cracking,discolouring,and crumbling at the seams.Mr.Richards can sue Messalot successfully although it was not he but the contractor who made the purchase from Messalot.

Johnson Ltd.enters into a contract to supply glass bottles to Brine Co.for its line of baby dill pickles.Since it is a new relationship,both parties want the option to end the contract without problems,so they include a clause that allows either company to terminate the contract on 30 days' written notice.Johnson finds that Brine Co.is too slow in paying its bills and too quick to question quality.On March 1,Johnson Ltd.gives Brine Co.notice in writing that the contract will end on March 31.Brine Co.insists that the 30 days' notice clause means 30 working days,not 30 calendar days,and thus Johnson must supply Brine Co.until April 1.Johnson refuses.Brine Co.loses two weeks of production when its supply of bottles runs out and sues Johnson for breach of contract. -Based on the above scenario,which is the most correct?

Sarah is suing her lawyer,Tom Takeitall,for the return of property worth $20,000 that she had given him.She had signed a properly sealed document making the gift to him.She says she knew what she was signing but felt overwhelmed by his manner. -If Sarah had not yet given him the property,she would not be obligated to do so since it was simply a gratuitous promise on her part,but,now that she has given it to him,she must prove duress on his part to get it back.

In the situation where misrepresentation occurs,where there has been rescission,there must have been reliance.